Editor's Note:

A few additional candidates you may want to put on your watch list. I'd wait for a dip on these:


- James


Cepheid - CPHD - close: 35.11 change: -0.39

Stop Loss: 31.85
Target(s): 33.00
Current Gain/Loss: unopened
Time Frame: 3 to 5 weeks
New Positions: Yes, see trigger

Company Description

Why We Like It:
CPHD is a diagnostics company with a very bullish stock. Shares have been consistently climbing higher for months. This morning Goldman Sachs actually downgraded the stock to a neutral but CPHD rebounded off its lows near short-term support at the 10-dma.

CPHD has not closed under technical support at its 50-dma in several months. It has been a consistent entry point for the bulls. I am suggesting we launch bullish positions on a dip at $33.00. More conservative traders could wait for an actual dip to the simple 50-dma instead. If we are triggered at $33.00 we'll use a stop at $31.85. Our target is $36.00. Aggressive traders could certainly aim higher but we don't want to hold over earnings in late July (date is unconfirmed).

NOTE: Readers may want to avoid the call options. The spreads are wide. Currently the spread on the Aug. $35 call is 65 cents with a $2.05 ask. We'd immediately be down -30%.

Trigger @ 33.00

Suggested Position: buy CPHD stock @ $33.00

- or -

buy the AUG $35 call (CPHD1120H35)

Annotated chart:

Entry on July xx at $ xx.xx
Earnings Date 07/21/11 (unconfirmed)
Average Daily Volume = 484 thousand
Listed on July 6, 2011